What are the reasons why start-ups fail within first five years?

Posted by Robert Norton on

I wrote a free eBook answering this exact question in 2020: The Top Reasons Start Up Fail and How to Avoid Them. You can get that here

Starting a new company is a big risk that requires many skills.  Being a Founder of a startup is likely one of the most complex jobs there is today. People greatly underestimate what it takes to be successful.  It takes at least 10 and more likely 15+ years to accumulate the experience needed for a high chance of success.

Here is a list of the skills we teach at The CEO & Entrepreneur Boot Camp:

1. Recruiting - Easy to do, hard to do well as quality of the team will be the #1 reason for success or failure. How do you know the right people? 

2. Management - An art that only comes from experience.  This will set the tone of your culture and its productivity and sustainability. 

3. Marketing & Branding - Another art few understand well. Get professionals involved early, as brand and marketing should help steer product development and identify the best customers for market entry very early. 

4. Product Development & Innovation - Where loads of Founders come from, but only 20% of what is needed for success too. Hence, the need for a balanced team. 

5. Operations, customer service - Not one of the riskiest areas because the skills are generic across many industries but must be tuned properly to your industry,

 11. Market Research - Deep domain experience is needed, and that only comes by understanding the marketplace you are entering. 

12. Vision - This is far more than most people understand. It includes 11 elements. See my article here

13. Competitive Strategy - This is a complex game of chess with potentially dozens of variables that must be decided and requires huge experience. And short-term versus long-term strategy are always different. 

14. Organizational Development (OD) - This is about building your infrastructure, processes and other assets needed to execute well. 

15. Industry/domain expertise - Although disruption can come from people outside the industry, not stuck in group think, you still require people with deep domain experience on the team to guide you in the current thinking of the industry. Elon Musk knew nothing about cars or space when he founded those companies, but he hired people that did and learned very aggressively, becoming an expert fast. 

Now, the CEO does not need to be an expert in all these areas, but that expertise is needed on a team.  And they need to understand how to manage that area, including knowing when someone else is good at it to execute.

I have also created a 3-part video course here reviewing this in more detail called The Entrepreneur's Journey here. It is designed to help entrepreneurs understand what they "Don't know they don't know". 


Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.

Call (619) SCALE06 or email info@AirTightMgt.com for a complementary strategic consultation.

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